Six nights ago, 16.6 million people – more than half of those in Britain watching TV at the time – turned their sets to ITV1 to watch three 18-year-olds battle for their places on The X Factor. Since the previous evening's broadcast, an undisclosed number of people – ITV does not reveal individual episode voting figures, but it is likely to be close to 1 million – had voted on their performances, leaving twins John and Edward Grimes and Welsh teenager Lucie Jones facing ejection on the Sunday results programme. In the end the Grimes twins, who perform as John and Edward, would triumph, leaving Jones sobbing onstage, but the manner by which that result was reached led 3,000 people to complain to the broadcasting regulator, Ofcom – 10 times the number that complained about the BNP leader's appearance on Question Time.

At the very same time, on Radio 1, the top 40 singles chart was being revealed to those few pop fans who weren't watching ITV1. The results were instructive. Of the current top 10, no fewer than six are songs by artists who were either discovered by The X Factor (JLS, Alexandra Burke), have recently appeared on the programme (Michael Bublé, Westlife, Black Eyed Peas) or, in the case of Cheryl Cole, judged it. The top three albums, meanwhile (Cole, Bon Jovi – who also performed – and Bublé), might also thank the show for some of their success. Burke's album is at No 7, the Black Eyed Peas at 10. On Monday the second album by Leona Lewis, the programme's 2006 winner, will be released, to almost certain chart dominance.

Six seasons after it premiered on British TV, the enormous popularity of The X Factor is hardly news. But while an audience increasingly familiar with the feints and tics of what remains, in essence, an old-fashioned talent show might be forgiven for starting to tire of them, its appetite for The X Factor and anyone associated with it appears only to be growing, and at a startling rate. Strictly Come Dancing, which the BBC hoped might be a potential threat to The X Factor's ratings supremacy, has been vanquished, with even its season's best audience share running 9% below its ITV1 rival.

Sunday's audience was the highest in the show's history – and given the controversy about John and Edward's victory (after judge and producer Simon Cowell in effect refused to cast his vote), and the runaway tabloid popularity that has given them the Brangelina-style nickname "Jedward", Cowell might reasonably hope for yet more this weekend. It is no coincidence that the English entrepreneur judge, who performs the same role on American Idol in the US, was this week revealed by Forbes magazine to be the biggest earner on American television, taking home $75m last year.

And yet if The X Factor's influence is familiar, so too is the fact that not everyone is delighted by its runaway success. This week Sting became the latest in a long line of those considering themselves authentic musicians to hit out at the show, describing it as a "preposterous" programme featuring judges who had "no recognisable talent apart from self-promotion, advising [contestants] what to wear and how to look" and a form of karaoke in which singers were permitted to conform only to narrow stereotypes. "They are either Mariah Carey or Whitney Houston or Boyzone and are not encouraged to create any real unique signature or fingerprint."

While some may argue that this may be precisely what has won the programme such an enormous mainstream audience, Sting's other argument, that The X Factor has "put music back decades", is more serious. Is he right?

Certainly the scale of the programme's dominance of the music chart is a new – and for those record labels with a new act to promote, potentially worrying – development. While the Christmas No 1 slot has been effectively ringfenced for the winner's single since the programme's launch, the fact that the show has arguably got better at picking talent means that this year's chart already features last year's winner, Alexandra Burke, and runners up, JLS. Tomorrow sees the release on download of a charity single sung by the programme's contestants in aid of Great Ormond Street hospital, which is very likely to hold the No 1 slot until this year's winner is ready to take over, effectively locking up the top of the chart until 2010.

In a further innovation this year, the Sunday results show has been built around other artists promoting their own singles, leading to a previously unforeseen scale of chart dominance. "In an age when there are very few truly mass-audience platforms left, the X Factor has become pivotal for those labels and artists seeking to reach a family-based audience," says Gennaro Castaldo of HMV, one of the few music retailers that retains a high-street presence. "As soon as an artist goes on, almost overnight we tend to see a huge surge in demand for their single or album, initially via downloads, but then over the course of the following week via physical CD sales instore and online."

Album sales, he says, "can double or treble or increase by even more, so much so that a good chunk of our marketing and planning at this time of year tends to revolve around the show now".

"Does it impact on the signing and release schedules of other labels? Of course it does," says James Foley, music editor of industry news site recordoftheday.co.uk. "They will do anything to avoid being up against JLS and Alexandra Burke and Leona Lewis, because they know they have automatic access to a promotions platform that other labels don't have." Foley cites the example of Robbie Williams, at one point a star so huge that an album launch would have carried its own momentum. With his recent release, however, "EMI factored The X Factor directly into their promotional schedule. In previous years there were other TV options open to Robbie and EMI, but if you are releasing something that needs to come through a well-placed promotional avenue, it needs to be on The X Factor." Williams appeared on the show on 11 October to perform his single Bodies; several observers directly blamed its comparative commercial failure – it fell out of the top 10 last week to No 23 – on Williams's nervous, highly eccentric performance on the show.

And yet while the programme's influence on the charts is unquestionable, some argue that it is more helpful to consider it as a light entertainment monster, existing within its own very strange ecosystem, than as a functioning branch of the music industry. For Paul Williams, editor of Music Week, the issue is "a bit more complicated than whether X Factor is a good thing or a bad thing. It follows on from a long history of talent shows on TV. The only problem with X Factor, for its critics, is that it's executed much more successfully than its predecessors, but it is absolutely in that tradition. To criticise it for being successful is a bit odd."

Gladys Knight, he points out, was discovered on a talent show in the early 50s, "and nobody could say she isn't a legend".

"The fact is that since there has been a music industry there has always been this issue of where the new talent is going to come from. When Elvis went into the army, people worried this was the end of rock'n'roll. The important thing is that the music industry makes sure that this isn't the only way in which new talent is discovered."

Other observers point out that very few contestants manage to forge lasting careers, so their long-term influence on the charts is hardly overwhelming. For every Leona Lewis, who became the first British solo artist to have a US No 1 with her debut album, there is a Leon Jackson, who won in 2007 but has scarcely troubled the pop world since; one could name a very long list of previous contestants in the same category.

Jon Savage, who wrote perhaps the definitive history of punk, England's Dreaming, as well as editing the Faber Book of Pop Music, says The X Factor should be understood as "returning pop music to its light entertainment function. If you view it in those terms, as an industry, then it's a fantastic success; if you think making music is a strange mix of industry and creativity and oddity and lunacy, then obviously it's not that." In one sense, though, he does agree with Sting: "After the Beatles, you had the idea that people could write their own material and be in charge of their own destiny. What The X Factor does is return popular music to its pre-Beatles state."

The programme's audience, too, might be said to be smart enough to know exactly what they are watching. The lead single from Jackson's debut album was beaten to the No 1 slot last year by the spinoff single from Peter Kay's merciless X Factor spoof, which parodied the programme's cynical idiosyncracies without doing its reputation the smallest harm.

There are, of course, plenty in the music industry who maintain a healthy contempt for the programme – Alan McGee, who signed Oasis, managed the Libertines and now runs music website toocooltodie.com, says: "I think Paul Weller said it best 30 years ago: the public gets what the public wants. If you are stupid enough to watch it that is what you get, you deserve it. I have no pity for you."

But others argue that it might even produce a backlash of truly creative music-making. "I think X Factor might be good for alternative music, giving kids something to push against," says Billy Bragg. "Don't just complain about it – get out there and do something challenging that proves you don't need any input from people like Simon Cowell to be successful."

In any case, note observers, the music industry has plenty of other pressures to be concerned about without worrying about The X Factor. Woolworths, Tower Records and Zavvi are long gone, physical sales replaced by downloads which, even if legal, are priced at a fraction of the £15 at which record companies once flogged CDs. Illegal downloads worth many billions have stolen sales from the market, while fans can now access millions of songs through streaming sites such as Spotify or Sky Songs. While the diversifying market is good news for consumers – thanks to price competition, the current No 1 single, JLS's Everybody in Love, can be downloaded for 79p on iTunes and 29p on Amazon – the financial bonanza days for the wider music industry are, for the present at least, over.

In this context, notes Paul Williams, "it would be bizarre to describe something that was watched by 16.6 million, exposing music to a quarter of the British population, as a threat". One could argue, indeed, that The X Factor expands rather than replaces the market for music; millions of pre-teens, for instance, will have been introduced to a song made famous by Julie London in 1955, Cry Me a River, thanks to Michael Bublé's performance on the programme three weeks ago. Savage calls the programme's audience "people who aren't passionate about music. And there's always been a huge market for people who weren't passionate about music."

"When it comes to the ills of the music industry, the blame is not to be laid at The X Factor's door," says Foley. "There is no one problem, and no one solution, but blaming X Factor is not the way. This is, after all, a 21st-century, hyper-real Opportunity Knocks. It involves huge ideas, the supposed £1m recording contract and a lot of razzmatazz, and it's very cleverly done, but in its essence it's no more cleverly devised than Opportunity Knocks."

• This article was amended on 16 November 2009 to make clear that Simon Cowell "in effect" refused to cast his vote.